About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

33 comments:

  1. 1
    Dave0 says:

    If I could only do one thing with $10 million, I would invest it in safe investments in order to generate a $100,000 per year income or more. I guess that could be classified as “starting your own company.”

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  2. 2
    Blurtman says:

    RE: Dave0 @ 1 – 30 year Tresuries would get you $300,000 per year.

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  3. 3
    Feedback says:

    As luck would have it, my company builds dream homes. Who says you can’t have it all, Tim? :D

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  4. 4
    ARDELL says:

    RE: Blurtman @ 2

    Locking into 30 year Treasuries in the lowest interest rate environment in decades would not be wise. Stagger that portfolio! My inner Investment Officer is coming out. For my Mom I put the longest money into corporate bonds at 7.5% years ago and the short money into Gov’t securities. If you are going to go long…go big!

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  5. 5

    RE: ARDELL @ 4 – Not that I disagree with what you said, but in Blurtman’s defense, he didn’t say that someone should buy 30 year treasuries which all mature in 30 years. If you did need more than the interest income at some point, that could be a huge mistake.

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  6. 6
    David Losh says:

    RE: Dave0 @ 1

    $100,000 a year is pretty easy to hit for an investment of a lot less than $10 Million.

    I of course would prefer to own a business than property, especially today.

    There is a lot of high quality labor, and great thinking minds in today’s labor force. It’s fun to be able to match capable people with the many needs people have for services.

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  7. 7
    Blurtman says:

    RE: Kary L. Krismer @ 5 – Sure. The locked in return might seem rather unattractive in the future, and as you indicate, if you wanted to sell in such a scenario, you would be taking a loss. But, you get a risk free return and sleep soundly while sailing the world, unless, of course,….

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  8. 8

    RE: Blurtman @ 7 – But if you buy $1M which mature in a year, $1M that mature in two years, $1M that mature in three years, etc., then you don’t face the same exposure to rising rates. And with rates as low as they are right now, I wouldn’t worry too much about having to invest each $1M at a lower rate when it comes due.

    So same risk free return, but you won’t take as large of a bath when you decide to cash in $2M for your new sailboat. ;-)

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  9. 9

    BTW, I’m one of the two negative votes on the “rate this post” because the two choices are not nearly enough.

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  10. 10
    Blurtman says:

    RE: Kary L. Krismer @ 8 – Hey, I am sailing around the world. I get into port, I buy food, alcohol, and withdraw money from the local ATM. I don’t have time to monitor the roll over strategy. Nor call a broker.

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  11. 11
    whatsmyname says:

    I pick neither.

    Question for the 68%: If you came into more money than you reasonably expect to ever have, or would ever really need, you would risk it and your time on getting more money that you don’t really need? What are these awesome businesses you want to spend your all time on?

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  12. 12
    David Losh says:

    RE: Blurtman @ 10RE: Blurtman @ 7

    I have this discussion a lot, about defining retirement.

    Sailing the world sounds great until you do it. After a while it’s boring, at least to me. I don’t like the two bottle of wine dinner crowd.

    There is a lot of reward in housing people, yes, but for me feeding families is much more important. Providing good paying jobs is another reward.

    For $10 Million you can put a company in place that has very little risk. I personally would buy a manufacturing company with a lot of dirt to go along with it. That would be the best of both worlds. Then you build the brand.

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  13. 13
    Azucar says:

    By Blurtman @ 10:

    RE: Kary L. Krismer @ 8 – Hey, I am sailing around the world. I get into port, I buy food, alcohol, and withdraw money from the local ATM. I don’t have time to monitor the roll over strategy. Nor call a broker.

    If you’re sailing around the world, the thing that you DO have is time. Most marinas have wifi these days – you can download whatever research material you need while in port (or cruising close enough to civilization to have a 3G signal… or why not get satellite broadband on your boat so you can do it everywhere?) and then work on your strategies while cruising the open ocean. Also, having bonds with maturity dates a year apart doesn’t require a whole lot of strategic maintenance…

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  14. 14
    HappyRenter says:

    What about starting a charitable organization? Do you really want to keep it all for yourself?

    But if I really had to choose one of the two, I would go for building my own Seattle home, probably as energy efficient as possible. But I would not spend the entire sum on it and invest the rest in some sort of “smart” portfolio. Other than that, I would probably keep doing whatever I’m doing now. Letting money decide your life might have a different turnout than what you were hoping for.

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  15. 15
    Chuck C says:

    I vote “build my dream home”. It may or may not be in the Seattle area, but other options weren’t given. I’d say that starting a business would be pretty far down on my list of things to do – knowing that I’d have enough dough to retire, my motivation to keep working would be pretty low and my business would probably be a miserable failure due to lack of motivation.

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  16. 16

    Start a business. One that barely does anything, but is sold as “actualizing sustainability potentials holistically.” Take the business public, plying the stock market analysts with food, wine, and prostitutes. Sell the stock when it’s worth ten times the original investment(and still producing nothing), then buy the dream home.

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  17. 17
    The Tim says:

    RE: Ira Sacharoff @ 16 – Heh, so your dream home would cost about $100 million, then?

    Also, what happens when you get sued for business model patent infringement by some company that IPO’d in 2011 or 2012? ;^)

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  18. 18
    ChrisM says:

    Hmm, I’m confused. Which choice is hookers & blow?

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  19. 19
    No Name Guy says:

    Well, a 10 million buck home wouldn’t be a dream…more like a nightmare Let’s do the math….

    http://assessor.snoco.org/services/faq/taxes.aspx#ballpark

    Say’s a ball park number is $12.37 / 1000 assessed value, so that 10 million “dream” home would only cost about $123,700 a year in property taxes.

    Throw in a conservative 1% / year long term upkeep cost….another 100,000 off into the breeze per annum on average.

    I hesitate to think of what the utilities would be on a 10 million buck “dream” home.

    OR lets see…..start my own company. Yeah…..”No Name Take and Bake Pizza Co” or “No Name Espresso”. A few hundred grand in start up, hire a manager to run it for me, with proper incentive structures to insure their and my interests are aligned (e.g. generous profit sharing). Pay the folks reasonably well (and with profit sharing), so they don’t rob me blind……and then take the other 9+ million, invest it in the Dividend Aristocrats and live off the results.

    The “Dream” house costs me hundreds of grand a year….the other way earns me hundreds of grand a year. Yup…..THAT is an easy choice to make.

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  20. 20
    Blurtman says:

    RE: ChrisM @ 18 – Choice 2, Hookers and Blow, LLC. A law firm?

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  21. 21

    RE: No Name Guy @ 19 – I don’t think Tim is envisioning the entire $10 being dumped into a house.

    But the scenario you describe probably helps explain why so many buyers of $1M+ houses don’t borrow a lot of money. They’ll have a lot of ongoing expenses even without the high mortgage payments.

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  22. 22
    redmondjp says:

    By Blurtman @ 20:

    RE: ChrisM @ 18 – Choice 2, Hookers and Blow, LLC. A law firm?

    No, the name on the firm would be Sheen, Carey & Lohan . . .

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  23. 23
    David B. says:

    I voted for starting the business because I don’t see myself as staying in Seattle for the long-term, more short/medium term. My dream home is someplace that isn’t choking on its own traffic and suffering the consequences of procrastinating investing in mass transit for so many decades.

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  24. 24

    By David B. @ 23:

    My dream home is someplace that isn’t choking on its own traffic and suffering the consequences of procrastinating investing in mass transit for so many decades.

    My dream home would never be within the city limits of Seattle. The poll though is ambiguous. I would assume “Seattle area” would include Maple Valley or Redmond, but what about Bainbridge Island or Port Townsend?

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  25. 25
    The Tim says:

    By Kary L. Krismer @ 24:

    …but what about Bainbridge Island or Port Townsend?

    Bainbridge Island, sure. That’s only a ferry ride away. Port Townsend? Not so much.

    My personal definition of “Seattle area” would be places that you can get to from Seattle within about an hour. Port Townsend is a pretty cool, laid-back little town though.

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  26. 26
    David Losh says:

    RE: The Tim @ 25

    I did a market analysis for a client in Renton, which I think is a great location. It was dismal. Prices had dropped for his property by $70K in about two years.

    I’d be interested in how the outlying pockets of what we call Seattle compare to the hot pricing we see in city.

    I should clarify that it was difficult to find comparable properties that were not short sales, or bank owned. The inventory was very low, but at those prices I wouldn’t see an incentive to sell.

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  27. 27
    David B. says:

    RE: Kary L. Krismer @ 24 – Port Townsend definitely sounds nice. It’s not in the “Seattle area”, though. No source i am aware of lists Jefferson county as part of the Seattle metro area.

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  28. 28
    BillE says:

    None of the above. That’s a ridiculous question. I’d buy a home in the sticks on a big chunk of land. I’d stay in western Washington, but not near Seattle.

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  29. 29

    RE: David B. @ 27 – The reason I even thought of Port Townsend is it is apparently a magnet for retirees, so seemingly a good place to build a dream home.

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  30. 30
    Lo Ball Jones says:

    I did the company when I had money and wish I had done the home. Companies have as much of a guaranteed return as a lottery ticket (unless you buy a car lot or laundry).

    Really, I wish I had moved into a shack in the woods and kept it all in the bank!

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  31. 31

    RE: Lo Ball Jones @ 30 – Sorry to hear about that experience, but it’s good you shared it with others.

    Carrying that story (or advice) a bit further, in my bankruptcy attorney days I saw more than one set of parents financially ruined in what should have been their retirement years by trying to setup one or more of their children in business. Business is hard, and positive returns are not guaranteed.

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  32. 32
    Lo Ball Jones says:

    By Kary L. Krismer @ 31:

    Business is hard, and positive returns are not guaranteed.

    Sure, I’m not trying to be a dream killer, but in my reading many of the most successful businesses were started with no money, or with someone else’s.

    Also, the main reason to start a business is to make money, not the other way around. If you’ve got money, hold on to it, and enjoy it. If a business idea comes along, spend $5 on a website and see if anyone bites, just like a poor person would.

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  33. 33
    Young Gun says:

    I would do both. I would buy, rent, remodel and speculate on property in snohomish county. It sounds like the life to me. Maybe I would work like 40 a week as apposed to 80!

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